Benicia looking for long-term solutions to $1.2 million shortfall

BENICIA -- The city is looking for long-term solutions to its $1.2 million budget shortfall, its leaders say.

As the budget process kicks into gear, city departments are looking to tighten their belts.

No new projects are on the horizon for the upcoming two-year budget cycle. Instead, city officials have indicated they will focus on implementing a long-term, budget stabilization plan that will include aggressive economic development and greater government efficiency.

"Failure to grow and broaden the local economy will result in atrophy of our economic base, further shrinking the funds needed to provide critical public services," City Manager Brad Kilger said in a staff report.

"Therefore, even as the city has dwindling resources, we should be investing more, not less, into our economic development program."

On Tuesday, the budget planning kicks off with the City Council hearing an update on proposed strategic-plan changes. Basically, there are none, other than crossing off finished projects from the last two years.

Kilger also will update the council on its next steps in the budget planning. They include study sessions in April and June, focusing on the city's marina fund and rising public employee retirement costs, among other budget-related issues.

After starting the year with a balanced budget, Benicia is facing a $1.2 million shortfall due primarily to lower than anticipated property tax revenues.

A drop in utility-users tax revenue and the decision to fund the senior water-rate discount with the general fund have contributed to the imbalance.

In January, the council agreed to use reserves and spending cuts for the current year's shortfall, allowing time to develop a longer-term budget stabilization plan.

City officials say the long-term budget plan will include growing the local economy through economic diversification. One of the city's current fiscal challenges, officials say, is an over reliance on one major business -- the Valero oil refinery -- for more than 20 percent of the city's general fund revenue.

Also, 69 percent of the city's sales taxes are from non-retail sources.

City officials also say they will conduct a thorough review of all programs and services in an effort to constrain costs.

The council is scheduled to meet at 6 p.m. Tuesday at City Hall, 250 E. L St. The budget discussion will follow the council's completion of open government training and annual review of code of conduct and rules of procedures.